Shutdown stops seasonal suds as beer approvals halted

In this Oct. 3, 2013 photo, Dylan Maz pours beer during a tour on Thursday, Oct. 3, 2013 at Lakefront Brewery in Milwaukee. The federal government shutdown could leave America's craft brewers with a serious hangover. (Carrie Antlfinger/AP Photo)

MILWAUKEE -- The federal government shutdown could leave America's craft brewers with a serious hangover.

Stores will still offer plenty of suds. But the shutdown has closed an obscure agency that quietly approves new breweries, recipes and labels, which could create huge delays throughout the rapidly growing craft industry, whose customers expect a constant supply of inventive and seasonal beers.

Gordon Biersch Brewing in San Jose has several new beer labels waiting for permits that are now stalled because of the shutdown, said co-founder and brewery director Dan Gordon. He said he's also waiting on a license for a new brand of beer.

"Everyone is going to be on hold," Gordon said. "Then you're going to have a big backlog. Five to 10 days of shutdown will cost close to a month of delays" for permits.

He said he may lose some money if his seasonal brews are delayed too long -- he can't release a fall beer in the middle of January -- and all the while, he's paying alcohol taxes.

"It's a one-way street," Gordon said.

The Alcohol and Tobacco Tax and Trade Bureau, or TTB, is a little-known arm of the Treasury Department. The agency will continue to process taxes from existing permit holders but applications for anything new are in limbo.

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"One could think of this shutdown as basically stopping business indefinitely for anyone who didn't have certain paperwork in place back in mid-August," said Paul Gatza, director of the brewers association, which represents more than 1,900 U.S. breweries.

A woman who answered the phone Oct. 2 at TTB's headquarters in Washington abruptly hung up after explaining that the government was shut down. Assistant administrator Cheri Mitchell did not respond to telephone or email messages.

The shutdown began Oct. 1 after a group of House Republican lawmakers blocked a budget deal in a last-ditch effort to stop funding for President Barack Obama's health care law.

The closing isn't expected to have much effect on industry giants such as MillerCoors or Anheuser-Busch. They can continue to produce existing products as usual. But the shutdown poses a huge problem for craft brewers, who build their businesses by producing quirky, offbeat flavors and introducing new seasonal beers, sometimes as often as every quarter.

Craft brewers around the country say TTB was taking as long as 75 days to approve applications before the shutdown. Now they're bracing for even longer waits. And tempers are flaring.

The shutdown could stifle new brewing projects in areas such as Oakland, where the industry has begun making a resurgence in a fragile economy.

P.T. Lovern of Oakland, who started Line 51 brewing company last year, said the wait for a new brewery permit is up to five months.

"So any breweries that have applications in will be affected or will be on the holding pattern," he said in an email to this newspaper.

Breweries such as Pacific Coast Brewing in Oakland that sell most of their beer by the glass in taprooms and restaurants are not affected by the shutdown. But Pacific Coast's plans to expand and start selling more growlers and kegs, which require permits from the bureau, may be put on hold if the shutdown drags on, said Steve Wolff, Pacific Coast president.

In this Oct. 3, 2013 photo, Mike Brenner, owner of Brenner Brewing in Milwaukee, stands in front of what he hopes to be his brewery. (Carrie Antlfinger/AP Photo)

"If you're not creating new beers you don't have to worry about it," Wolff said. But "if want to do some new things it might be a problem."

Tony Magee, owner of Lagunitas Brewing in Petaluma, posted messages on his Twitter account this week ripping the shutdown.

"Feds are gonna shut down the already incompetent gov while hundreds of small breweries, including us, have labels pending. Nice." That was followed with "Wanna regulate? Perform or get out of the way."

Lagunitas Chief Operating Officer Todd Stevenson called the TTB shutdown a "headache." He said the company was planning to submit an application to package its autumn seasonal Hairy Eyeball in 22-ounce bottles instead of 12-ounce bottles but can't move forward.

"It's just aggravating," Stevenson said. "It is frustrating that government can't do its job. Doing what they're doing now is unprecedented."

Bryan Simpson, a spokesman for New Belgium Brewing in Fort Collins, Colo., said his brewery has three recipes and five new labels awaiting approval. The company is especially worried that the release of its new spring label, Spring Blonde, could get pushed back. More delays might force New Belgium to shell out extra money to speed up the label printing and rush the beer to market, he said.

"Everybody is frustrated in general," Simpson said. "The whole way this has played out has been disappointing for the entire country."

Lakefront Brewery in Milwaukee has applications pending for new packaging of its IBA dark ale and for permission to offer a sour cherry dark lager called John, a brewery employee's own concoction.

The brewery hopes to launch the IBA packaging in November and John in December, but nothing is certain now. If the shutdown causes delays, the brewery will probably have to rush the beers to market, he said.

"If we lose that first month, we lose out on a good chunk of money," brewery spokesman Matt Karjnak said.

PARTY FOUL: The partial government shutdown has closed an obscure agency that approves new breweries, recipes and labels, which could create huge delays throughout the rapidly growing craft beer industry. UNHAPPY HOUR: The Alcohol and Tobacco Tax and Trade Bureau, or TTB, is a little-known arm of the Treasury Department. The agency will continue to process taxes from existing permit holders, but applications for anything new are in limbo. A woman who answered the phone at TTB's headquarters in Washington abruptly hung up after explaining that the government was shut down. DIRE CHOICES: The closing isn't expected to have much effect on industry giants such as MillerCoors or Anheuser-Busch. They can continue to produce existing products as usual.